US Democratic senators have called on the Department of Defense to immediately launch an investigation into Elon Musk's SpaceX, citing national security concerns. Foreign media and court testimony indicate that investors suspected of having ties to China have indirectly invested in SpaceX through company structures in the Cayman Islands and the British Virgin Islands. Given SpaceX's involvement in US military satellites, intelligence systems, and the Starlink communications network, the presence of Chinese funding has raised concerns about foreign investment scrutiny and national security risk assessments.
Senators call for Pentagon to launch national security review, raising concerns about Chinese investment.
According to reports , Democratic Senators Elizabeth Warren and Andy Kim jointly wrote to Defense Secretary Pete Hegseth, demanding that the Department of Defense immediately review SpaceX. In their letter, they stated that if Chinese funds were to actually acquire a stake in SpaceX, it could constitute a "national security threat" and potentially affect the security of critical U.S. military, intelligence, and civilian infrastructure.
The senator also cited media reports and court testimonies, suggesting that some investors with ties to China allegedly used company structures in the Cayman Islands and the British Virgin Islands to indirectly purchase SpaceX shares in order to conceal the actual source of funds and potentially circumvent the foreign investment review mechanisms that should apply.
SpaceX's involvement in the military and Starlink network raises extremely high national security concerns.
SpaceX, founded by Elon Musk, is currently responsible for launching satellites used by the U.S. military and intelligence agencies, and operates the Starlink satellite communications network for the U.S. Department of Defense. The system is also used to support Ukraine's defense operations.
Reuters noted that SpaceX did not immediately respond to requests for comment. Senators believe that any potential foreign ownership of SpaceX raises high national security concerns, given its involvement in military, intelligence, and critical communications infrastructure.
The xAI acquisition and court cases have been exposed, revealing a private equity investment structure that circumvents regulations.
In the letter, the senator mentioned SpaceX's recent acquisition of xAI. Musk described this move as creating a highly integrated innovation ecosystem encompassing AI, rockets, space-based networks, direct-connect mobile communications, and instant messaging platforms. The senator believes that with the continued expansion of its business footprint and technological integration, the question of whether Chinese funding is involved is becoming more pressing.
In addition, documents from a Delaware court last year show that a fund manager, Iqbaljit Kahlon, set up a fund specifically for investing in SpaceX. The fund operated with a special purpose vehicle (SPV) structure and had a Chinese listed company, "Leo Investments," as a limited partner.
SpaceX informed the fund that it would be unable to purchase SpaceX shares if Leo Investments remained on the investor list. Subsequently, the Chinese investor was removed and $50 million was refunded. The court later upheld the fund manager's decision to remove the Chinese investor.
(Note: A special purpose vehicle (SPV) is a legal entity that exists for a specific purpose. Companies establish SPVs for specific projects to isolate risks from the parent company. SPVs can be dissolved after the project ends. They are also often used to comply with regulations, allow foreign capital to indirectly participate in specific industries, or as a tool for financing and asset securitization, such as issuing bonds, raising funds, and packaging assets into investment products.)
The FOCI guidelines were specifically mentioned, requiring an assessment of whether to submit the application to CFIUS for review.
In their letter, the two senators specifically mentioned that if SpaceX does indeed have Chinese investors, it could trigger U.S. regulations regarding "Foreign Ownership, Control, or Influence" (FOCI). The senators stated that if foreign investment could potentially access sensitive information or technology, appropriate national security risk management and review mechanisms must be activated.
The letter also requested the Department of Defense to explain whether SpaceX has Chinese capital holdings, whether it needs to apply FOCI risk mitigation measures, and to assess whether the relevant foreign investment case should be submitted to the Committee on Foreign Investment in the United States (CFIUS) for further review. The Department of Defense was required to respond no later than February 20.
This article, which claims that Chinese funds have indirectly invested in SpaceX, was first published on ABMedia, a ABMedia . Democratic Party member Warren has called for a full Pentagon investigation .
